Usually, agricultural land is considered a good investment for high net-worth individuals and for those with surplus income. For salaried or self-employed individuals, living in cities, going through all this process will be time-consuming and tiresome.
Farmland is a true alternative investment because its value is not tied to the performance of other assets. For example, the stock market could fall substantially, while farmland retains its value, or even rises due to economic or political factors.
The average farm income for this group is about $8,000 a year, according to USDA. As a result, many have at least one family member take a job outside the farm as a primary means of income. But even though they may not be money machines, the farming lifestyle is still attractive for a lot of people.
There are many private equity funds that are available to investors. Most funds have a minimum entry for around $500,000, with the average private equity fund requiring between 1 and 5 million. Private equity funds will then purchase farmland and lease it out to a farmer.
Bill Gates and his wife Melinda own a whopping 242,000 acres across 18 states. The land is held by Cascade Investment, the holding company the Gates family uses for a variety of investments.
The average rate to rent irrigated and non-irrigated cropland in 2018 was $215 and $125 per acre, respectively. The average rate to rent pastureland was $12.50 per acre in 2018. ... Granted, that money would then be taxable, and you would need to fill out Form 4835 with the IRS to list your farm rental income.
The closest that an investor can get to owning a farm without actually doing so is by investing in a farming-focused real estate investment trust (REIT). Some examples include Farmland Partners Inc. (FPI) and Gladstone Land Corporation (LAND). These REITs typically purchase farmland and then lease it to farmers.
Farmers make money by selling consumer products to distributors that bring these products to grocery and retail stores. Farmers have large upfront costs, but if you own the land and assets, you can live off of the income forever.
Yes, you can make productive use of your 100-acre. Make it a hunting ranch by planting some trees and bringing in some animals for guided tour ... That'd not be labor intensive, and would be more profitable than farming or ranching.
Five acres may not sound like a lot of land, but many farmers have been successful at making a living on 1 acre and 2 acres, and even less land than that. It takes careful planning, creativity, and hard work, but it can be done.
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